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Hoegh predicts strong FSRU demand despite red Q1

Hoegh predicts strong FSRU demand despite red Q1
Hoegh LNG has reported $2.3m loss for the first quarter 2015, improving on a $4.5m loss in the same period last year.

The result comes despite time charter equivalent (TCE) revenue more than doubling from $17.2m to $42.2m as the company's fleet expanded.

The FSRUs Lampung and Independence contributed full-quarter revenues, dampened by start-up costs for the Hoegh Gallant, which since the period ended has arrived in Egypt and passed performance and commissioning tests.

LNG has been largely insulated from the lower oil price as around 70% of its global volumes are under long term contracts, although spot LNG prices have fallen by up to 50% in Asia.

This lower price, coupled with a near-50% increase in liquiefaction capacity over the next three years are positive signs for the FSRU market, according to Hoegh LNG. It expects that new entrants to the market looking to import LNG are likely to adopt the FSRU approach, and so forecasts two to four FRSU contracts to be signed each year for the next five years.

"To position itself for the expected strong growth in demand for FSRUs, the company issued an FSRU newbuilding tender in 2014," the company's earnings release stated. "The company has received attractive offers and is now considering to accelerate its stated newbuilding investment plan."

The company's four LNG carriers, which are on long charters, had an uneventful quarter as they went about their business, despite many other LNG carrier operators suffering in an oversupplied market.